Business software developed in NZ attracts growing interest in the US.
Such is the globalised nature of doing business today that a Kiwi company can provide software to a US law firm acting for Mexican migrants, whose paperwork is processed in the Philippines.
Auckland-based ActionStep software is used by Texas firm Jack Stern Law, which specialises in representing Mexicans accused of illegally entering the US, says ActionStep chief executive Ted Jordan.
Because public defence law is not well-paid, Stern was keen to cut costs by outsourcing the processing of legal paperwork to a team of paralegals in the Philippines.
ActionStep, a cloud computing provider, supplied the software and system that allows the law firm to conduct business 24/7 across the globe, via the internet.
When alleged illegal migrants are picked up, Stern's team can enter the relevant information into its system and the team in the Philippines can process the paperwork overnight, ready for a court hearing the next day.
Even the deal to buy Jordan's software was internet based, as he and Stern negotiated face-to-face on Skype. The Stern data is stored at ActionStep's North Carolina facility.
It has another data centre in London and two in New Zealand.
"It was an ideal business for our platform," Jordan says.
"All you need is a web browser and an internet connection."
The South African-born entrepreneur has 20 years' experience in the technology business and, despite senior executive roles at US software solution firms UCS, Mosaic Software and DemandStar.com, he always kept his hand in, in terms of software design and systems analysis.
Those skills proved handy when he moved to New Zealand with his wife and children in 2002 for the usual family reasons. New York, to his mind, wasn't the best place to raise kids.
He set to work writing software for small-to-medium size (SME) businesses, companies that often cannot afford the type of integrated technology used by larger operations.
"I was able to write the first version of the product by myself," he recalls. All the applications - accounting, contract management, sales, debtor management, marketing and others - are unified in a single application.
"At its most basic, it's a complete business system that runs in the cloud and has all the software that you need for business," Jordan explains.
Immediate savings can be achieved by ditching all the unnecessary hardware and the complexity of running multiple systems. All the information is in one place and there's no double data entry, a small thing but a big problem for the SME sector.
Jordan developed his system in conjunction with his client base, adding additional capability as his business grew.
"It's only recently that we've got to the point that we say that this software is complete and we can now take it to the market at large," he says.
As a consequence, Jordan has been able to keep ActionStep's development costs relatively low.
He now has more than 100 customers, mostly in New Zealand and a few in Australia, a British client, Jack Stern in the US and one each in South Korea and China.
There is a lot of unsolicited interest from the US, largely driven by a project conducted by a university, the UCLA Anderson School of Management.
The school selects businesses around the world for its postgraduate students to visit, to conduct real-world analysis, prepare an "investment grade business plan" and an investor report.
ActionStep got five post-grad students, who conducted more than 120 one-on-one interviews with clients, client prospects and competitors.
Some companies are damned as sub-investment grade in their final report, Jordan says, but "in our case the report was very favourable".
It found that ActionStep had a significant competitive advantage compared with its peers.
ActionStep would be profitable within two years of establishing a base in the US and would record revenue of more than US$50 million and earnings before interest and tax of under US$20 million within five years.
"That's now been validated by interest out of the US," says Jordan, who now possesses a detailed strategy and programme for entering the US market.
The total exercise cost him about US$12,000, he says, with more than a hint of incredulity at his good fortune.
Having kept a tight rein on the company's expansion while still in "builder phase", Jordan is champing at the bit to expand in the US, New Zealand and Australia.
"We're going to really capitalise in the next 12 months," he says.
Additional funding, whether by private equity or public offering, remains an option but "it depends on the appetite of the market".
"My preference," he says, "is to keep it as a Kiwi-owned company."By Nick Smith